Any business owner knows the basic principle of tax deductions: you can write off any business expense that was incurred while producing income. But that’s obviously not all there is to it, as is often evidenced by the stresses and headaches that return with every tax season. That’s because that basic principle is only half the story. Section 23 (g) of the Income Tax Act goes on to list exceptions to the basic principle, which can make things confusing. So to save you time and energy, we’ve found a few common business expenses that are often forgotten when it’s time to add up those tax breaks.
When business really gets going, you’ll find yourself buying or replacing things around the office without a second thought, often out of your own pocket. The definition for office equipment is incredibly loose, but can be summarised as any piece of equipment used in the business to meet business goals. Stationery and computers come to mind, but this definition can widen to include all kinds of furniture in the business, printers and their consumables like ink cartridges and paper, even maintenance and cleaning supplies. Here’s the catch: if the item in question is priced under R7000, it’s considered tax deductible. If it’s over R7000, however, it is considered a capital expense but the depreciation of the item is tax deductible.
Transport and vehicle expenses
Depending on what type of business you’re in, there can be a lot of travelling that gets done in the process of running it. But, generally, no business is ever completely static so there are travel expenses that you could easily write off for tax. Out-of-town trips to conferences, for example, fit this description. What are other transport costs that you could deduct when filing your business’ tax? Any expenses incurred through the use of company-registered vehicles, any costs that employees had to pay while travelling to and from meetings with clients, and any flights and bus fares paid in pursuit of business. In fact, transport expenses that are tax deductible aren’t just limited to modes of transport, but include accommodation (on business trips, for instance) too.
While we’re on the subject of business trips, did you know that all of the expenses you incur while entertaining clients are also tax deductible? So, in addition to the the cost of getting to and from client meetings, you can also write off the cost of the meetings themselves. By this we mean coffee, drinks, live entertainment and dinner can all be written off if they were part of a business meeting. You can even write off a whole game of golf as a business entertainment expense if businesses arrangements were made during the game and possibility of future income is evident. That’s basically the only caveat: you need to be able to prove to SARS that the entertainment was provided in the pursuit of business.
Telephone and mobile costs
Very similar to travelling expenses, telephone and mobile expenses fall within the definition of tax deductible business expenses for the simple reason that your telephone and mobile phones will be used to conduct business and produce income. But what kinds of telephone and mobile phone expenses, specifically? This is crucial for businesses with employees on the move, who regularly use their phones to do business. The kinds of expenses that you can claim against range from airtime and data costs to repairs, and the depreciation of telephone and mobile devices that are priced above R7000. Most businesses don’t bother claiming these deductions because of the effort of keeping logs for several calls made every day over the course of a year. It’s a log of tracking and paperwork, but perhaps if they knew how much they stand to save in rebates they’d think differently.
Image credit: Themocracy